“When are consumers going to stop getting the short end in this bailout?

Credit card firms back in hot seatBy VICTORIA MCGRANE & LISA LERER | 3/4/09 4:13 AM EST

Longtime supporters of credit card reform have a new weapon in their rhetorical arsenal: the $700 billion Wall Street bailout.

“The big banks got billions of our tax dollars to rescue them from their own financial mess. Now they turn around and hit us with higher interest rates and fees on our credit cards,” read a recent alert from the Consumers Union, the publisher of Consumer Reports.

Indeed, a coalition of consumer advocates believes the time is right for cracking down on high credit card fees, abusive practices and loose regulations in the credit card industry.

“When are consumers going to stop getting the short end in this bailout? Chase, Citibank, HSBC, Capitol One and others recently hiked interest rates, with the average card rate now about 14 percent. Meanwhile, the banks are paying as little as 0 percent for overnight loans. Unbelievable,” the alert declared before prompting the reader to tell Congress to pass credit card legislation.

Consumer advocates and some Democrats have pushed for tighter credit card regulations for more than a decade, but they could not overcome resistance from card issuers, banks and financial services firms. Last year, a credit card bill sponsored by Rep. Carolyn Maloney (D-N.Y.) passed the House but died in the Senate. And in a January 2007 hearing, Senate Banking Committee Chairman Chris Dodd (D-Conn.) put the industry “on notice,” warning card issuers to halt abusive practices.

Now, in the wake of the financial crisis, advocates believe a major credit card bill has become almost inevitable.

“Critical mass for credit card reform is definitely at its highest level ever,” said Travis Plunkett, legislative director of the Consumer Federation of America. Credit card legislation has been introduced in both the House and the Senate already this year.

Credit card defaults have risen over the past year as strapped consumers struggle to make their payments. Some lawmakers see a parallel between abusive credit card fees and the predatory mortgage lending that contributed to the subprime crisis. Now, public and congressional anger at Wall Street is clearly coloring lawmakers’ attitudes toward credit card lenders as well.

A co-sponsor of the House bill, Rep. Maxine Waters (D-Calif.) assailed CEOs of major banks for raising interest rates on consumers after accepting billions in taxpayer-funded bailouts during a Feb. 12 hearing.

Addressing the eight Wall Street CEOs as “captains of the universe,” she demanded to know which of them had notified credit cardholders of increased rates. Bank of America CEO Ken Lewis said his company has raised rates on 9 percent of its customers. Two other CEOs also raised their hands in the affirmative, including the head of embattled Citigroup, which recently reached a new deal with Treasury to give the federal government control of about 36 percent of the company.

Dodd did not make this specific criticism when he introduced his own credit card legislation the same day as the CEO hearing in the House, but he believes the timing is right for credit card reform.

“Families in Connecticut and across the country are struggling to make ends meet as layoffs continue, home values plunge and lines of credit are cut or canceled,” Dodd said. “The last thing they need is further financial hardship brought on by abusive credit card practices. These practices are wrong, they’re unfair, and they must end.”

“At a time when Americans are becoming increasingly reliant on credit cards, credit card companies are being more aggressive about finding ways to charge their customers,” he said.

In the House, Maloney reintroduced The Credit Cardholders’ Bill of Rights. Her bill is sponsored in the Senate by Democrats Charles Schumer of New York and Mark Udall of Colorado. Lobbyists and advocates are also closely watching Dodd’s bill. Both bills would prohibit arbitrary interest rate increases and excessive fees.

There’s been action on the regulatory side as well. In December, the Federal Reserve passed the strongest credit card rules in decades, banning certain practices that rapidly increase penalties. The new rules also forced credit card companies to be clearer about their billing practices.

The Fed rules won’t take effect until mid-2010. That’s far too late for struggling cardholders facing default now, say consumer advocates arguing for even stricter legislation.

Banks say they are currently working to implement the new Federal Reserve rules, which they believe address most if not all of lawmakers’ concerns about credit card practices.

The lenders also warn that tougher action by Congress might backfire and force lenders to tighten credit just when consumers need it most.

“There is a serious risk that such actions could end up hurting the very people they’re trying to help because it limits the ability of card companies to lend to consumers and small businesses at the very time they can least afford it,” said Ken Clayton, managing director of credit card policy for the American Bankers Association. The trade association is leading the industry’s efforts on the credit card issue.

The bad economic environment has driven up the cost of credit card lending, despite what the Federal Reserve has done, Clayton argues.

Rising delinquencies and unemployment rates mean that fewer people are paying their bills. Moreover, investors are shying away from the secondary market for asset-backed securities — which funds 50 percent of credit card lending, he said. Lenders have been forced to turn to more expensive sources to fund lending, further driving up the cost of that credit.

The Treasury’s program to address this dynamic for credit cards, known as the Term Asset-Backed Securities Loan Facility, was just announced Tuesday. The program’s goal is to help lower the cost of credit for consumers by providing investors with financing to help them purchase certain asset-backed securities.

Lawmakers should allow the program time to work, Clayton said.

“They have to be worried that if they do something that spooks investors, it will just perpetuate the problem that they and the Federal Reserve and the Treasury Department are trying to get at.”

Accounting Fraud...Really? look at all thePublicCompnaies that dumped their losers into private NCFE...BIGGER THAN ENRON!!

The push to credit 'mortgage-back securities' as the causal effect of our financial crisis is very troubling and misleading.
Yes,the home mortgage crisis is a huge contribution, however do you honestly believe Iceland, a Country, has gone bankrupt because of 'low income'or 'mortgage backed securitues'?

We cannot continue to allow the false rhetoric to soar and the truth to be buried. If we continue to blame 'mortgage-backed securites" as the root of the problem, justice will never be ceased.

We need to get to the root of this Global Financial Crisis, whatever the outcome.

Remember, Corporate Bankruptcy,Debtor in Possession Financing,(Darla Moore's invention-Richard Rainwater's wife), Healthcare Fraud and REIT's would be a great start.

I believe we should go back to 1997. The year Healthcare Reform was passed.

In 1997, the largest healthcare company in the nation was the "Frist Family" and friends' Hospital Corporation of America , HCA, or any one of their affiliates...There are many players here so try to keep up!

FOR IMMEDIATE RELEASE
THURSDAY, JUNE 26, 2003
WWW.USDOJ.GOV
LARGEST HEALTH CARE FRAUD CASE IN U.S. HISTORY SETTLED
HCA INVESTIGATION NETS RECORD TOTAL OF $1.7 BILLION

WASHINGTON, D.C. - HCA Inc. (formerly known as Columbia/HCA and HCA - The Healthcare Company) has agreed to pay the United States $631 million in civil penalties and damages arising from false claims the government alleged it submitted to Medicare and other federal health programs, the Justice Department announced today.

One must wonder about the mortgage-related securities JPMorgan is taking onto its books. The following are not the only questionable liabilities JPMorgan has taken on that Richard Rainwater was directly involved with and I am not referring to oil.

JPMorgan is taking on about $176 billion of WaMu home loans, and marking down almost $31 billion of that right off the bat.

Just before the Real Estate crash in 2007, JPMorgan Chase financed Richard Rainwater’s REIT, Crescent (CEI) sale. (Many investors wondered about this move)

Jul 28, 2003
2003-87
SEC Settles Enforcement Proceedings against J.P. Morgan Chase and Citigroup
FOR IMMEDIATE RELEASE
J.P. Morgan Chase Agrees to Pay $135 Million to Settle SEC Allegations that It Helped Enron Commit Fraud
Citigroup Agrees to Pay $120 Million to Settle SEC Allegations that It Helped Enron and Dynegy Commit Fraud

The following is an excerpt from a 10-K SEC Filing, filed by J P MORGAN CHASE & CO on 3/9/2006: Enron litigation. JPMorgan Chase and certain of its officers and directors are involved in a number of lawsuits arising out of its banking relationships with Enron Corp.

The three current or former Firm employees are sued in their roles as former
members of NCFE's board of directors
National Century Financial Enterprises litigation. JPMorgan Chase, JPMorgan
Chase Bank, JPMorgan Partners, Beacon Group, LLC and three current or former
Firm employees have been named as defendants in more than a dozen actions filed in or transferred to the United States District Court for the Southern District of Ohio (the "MDL Litigation"). In the majority of these actions, Bank One, Bank One, N.A., and Banc One Capital Markets, Inc. are also named as defendants.
JPMorgan Chase Bank and Bank One, N.A. are also defendants in an action brought by The Unencumbered Assets Trust ("UAT"), a trust created for the benefit of the creditors of National Century Financial Enterprises, Inc. ("NCFE") as a result
of NCFE's Plan of Liquidation in bankruptcy.

"...the Order finds that JPMorgan Chase was a cause of NCFE's violations of Section 17(a)(3) of the Securities Act, requires JPMorgan Chase to cease and desist from committing or causing any violations and any future violations of Section 17(a)(3) of the Securities Act, and orders JPMorgan Chase to pay disgorgement of $1,286,808.82 and prejudgment interest of $711,335.76. JPMorgan Chase consented to the issuance of the Order without admitting or denying any of the findings therein."

JP Morgan Settles SEC Proceeding Relating to Activities as Trustee to National Century Financial Enterprises

The SEC settled administrative proceedings against JPMorgan Chase & Co relating to its activities as an asset-backed indenture trustee for certain special-purpose subsidiary programs (programs) of National Century Financial Enterprises, Inc. (NCFE), formerly a Dublin, Ohio healthcare financing company, during the approximate period 1999-2002. According to the SEC's Order, JPMorgan Chase and Bank One Corporation, which merged into JPMorgan Chase in 2004, at the instruction of NCFE, made transfers between reserve accounts in the programs that contradicted NCFE's representations to investors about how the reserve accounts would be used and contravened the requirements of the indentures governing the programs. In addition, the Order finds that pursuant to NCFE's instructions, JPMorgan Chase and Bank One made month-end transfers of huge amounts of reserve account funds and that these transfers helped NCFE mask substantial and growing reserve account shortfalls. Based on the above, the Order finds that JPMorgan Chase was a cause of NCFE's violations of Section 17(a)(3) of the Securities Act, requires JPMorgan Chase to cease and desist from committing or causing any violations and any future violations of Section 17(a)(3) of the Securities Act, and orders JPMorgan Chase to pay disgorgement of $1,286,808.82 and prejudgment interest of $711,335.76. JPMorgan Chase consented to the issuance of the Order without admitting or denying any of the findings therein. In the Matter of JPMorgan Chase & Co.

A little history of National Century Financial Enterprises (NCFE):

Prior to bankruptcy, NCFE provided financing to various healthcare providers through wholly-owned special-purpose vehicles,including NPF VI and NPF XII, which purchased discounted accounts receivable to be paid under third-party insurance programs. NPF VI and NPF XII financed the purchases of such receivables, primarily through private placements of notes.

TUESDAY, JULY 10, 2007
FOR IMMEDIATE RELEASE
http://www.usdoj.gov/usao/ohsn
SUPERSEDING INDICTMENT CHARGES FORMER EXECUTIVES OF HEALTH CARE FINANCING COMPANY WITH CONSPIRACY, FRAUD, MONEY LAUNDERING

COLUMBUS – A federal grand jury here today returned a superseding indictment charging eight former executives of National Century Financial Enterprises (NCFE) with conspiring to defraud investors by diverting millions of dollars in investors’ funds, fabricating data in investor reports, and moving money back and forth between accounts in order to conceal investor fund shortfalls. NCFE, based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November, 2002.

All defendants, except for James K Happ, were initially indicted in May, 2006. United States District Judge Algenon L. Marbley will preside over the case which is scheduled for trial on November 5, 2007.

“All defendants, except for Happ...”
Who is James K Happ?

James K Happ has an interesting employment history.

SEPTEMBER 9, 2003
Source: ANNUAL MEETING OF STOCKHOLDERS-SEPTEMBER 9, 2003-Med Diversified Inc.
JAMES K. HAPP has served as chief executive officer of our subsidiary,
Tender Loving Care Health Care Services, Inc., since October 2002.
Previously, Mr. Happ served for three years as executive vice president of NCFE,
during which time he restructured the servicer department to improve operational
Performance and accelerated the utilization of technology to increase operational
efficiency. Mr. Happ also served as chief financial officer of the
Dallas-based Columbia Homecare Group, Inc., a home care company with more than 500 locations nationwide and more than $1 billion in revenue in 1997.

In this role, he directed the company through the challenging reimbursement climate, known as the interim payment system, and participated in the divestiture of all of Columbia/HCA's home care operations. (All of which are in the Bankruptcy case in Tennessee) Who owned Columbia Homecare Group, Inc.?